Digital twins: from manufacturing to the whole organization
Most of us are familiar with the traditional concept of digital twins and their applications in the manufacturing realm as means to create digital copies of physical objects, being that of a car or an engine or a virtual factory. Modern digital twin technology has been evolving well beyond the purely industrial and “physical” dimension, to embrace all elements of a business: It’s a concept that analysts refer to as Digital Twins of an Organization (DTO).
The theme is extremely popular and, a few days ago, I had the pleasure to discuss it with two insightful and passionate professionals: Robert Weller, Head of Value Accelerators Delivery at SAP Signavio, and Lincoln Kirsten, Global SAP Transformation Executive at Fujitsu.
Why is DTO getting so much traction? How is this discipline evolving? What do SAP Signavio and Fujitsu have in store that can help companies establish successful DTO models?
The conversation was thought provoking and with this blog, I am pleased to share my findings.
What’s a DTO
According to Gartner® : “A digital twin of an organization (DTO) is a dynamic software model of any organization that relies on operational and contextual data to understand how an organization operationalizes its business model, connects with its current state, responds to changes, deploys resources and delivers customer value.”₁
Lincoln Kristen of Fujitsu further explained during our meeting: “What is interesting to note is that DTO models include value chains, business processes, decision-making procedures, information systems, and human elements to simulate, analyze, and predict the outcomes of strategies and decisions, virtually, before real-world implementation.”
“We could say,” added Robert Weller of SAP Signavio, “that a DTO mirrors how the business (as whole) operates and adapts. Modern organizations are complex sets of connected business units, processes, people, systems. DTO showcases interdependencies among the different entities and impact of change at all levels.”
Why DTO and why now
The attention towards the DTO discipline and supporting solutions is tangible among the companies we talk to. “The reason lies in the high rate of digital and business transformation companies have been experiencing,” said Robert. “DTO gives them the visibility and understanding they need. By creating a digital replica of their organization, companies can better plan, test ideas, prioritize, foresee risks and outputs, and govern complexity.”
“Also, the increased sophistication of process mining solutions, which are key components of DTO, as well as the infusion of Gen AI, have been key drivers of the current DTO hype as they allow for more advanced digital twins projects,” he noted.
Lincoln agreed on that perspective: “Several converging factors have made DTO both feasible and highly relevant in today's business environment, driving their growing interest and hype. In recent years, digital technologies such as AI, machine learning, IoT, big data analytics, process mining, and cloud computing have provided the necessary tools and infrastructure for creating and managing sophisticated digital twins. Additionally, organizations today operate in increasingly complex and dynamic environments and, therefore, call for better decision-making processes. That creates a driving force that can easily be associated with DTO,” said Lincoln. As per Gartner report “a digital twin of an organization helps to prioritize, guide, plan, monitor, analyze and scale complex initiatives. Technology innovation leaders can use this Market Guide to learn best practices for creating and using a digital twin of an organization.”
Our approach to DTO: Enterprise observability with industry expertise
Traditionally, SAP Signavio’s approach to digital twins has served the concept of process observability allowing companies to visualize processes as they should happen, as they execute and impact on customers and employee satisfaction. In 2023, with the acquisition of LeanIX by SAP, we lifted our DTO proposition from process observability to the next level of enterprise observability, by adding the technological dimension with SAP LeanIX.
Robert explains: “Companies can build a virtual representation of any business process with associated systems, simulate different process scenarios, and calculate the impact of alternative technologies. They can receive recommendations with ready to run content (value accelerators) and GenAI, as well establish a continuous improvement loop by leveraging our performance monitoring and value analysis capabilities.”
Fujitsu adds to the equation by bringing in a wealth of industry and project expertise. The value accelerators SAP Signavio and Fujitsu deliver represent the blueprints to build a DTO; companies do not have to start from the ground up but receive guidelines and inspiration.
Lincoln further explained: “Each of us brings unique capabilities to the table that, when integrated, can enhance the design, implementation, and operational efficiency of DTOs. Currently, we are co-developing a DTO framework that relies on SAP software, precisely SAP Signavio and SAP LeanIX, and combining that business transformation engine with Fujitsu’s innovative solutions that address business challenges and solve societal issues: our Digital Annealer (Fujitsu’s Quantum-Inspired computing technology), Kozuchi (Fujitsu’s AI Platform), and the Digital KAIZEN, are just a few of these solutions that are being incorporated into our DTO framework.”
The use cases
During the meeting, Lincoln remarked that DTO use cases are vast, spanning all industries and including areas like enterprise performance and cost optimization, customer experience management, mergers, and acquisitions, among many others.
“Take the Supply Chain Optimization use case as an example: With DTO, a company can significantly improve its supply chain resilience, reduce costs, and enhance customer satisfaction through more reliable and efficient deliveries. DTO models generate insights into action and help people make more intelligent decisions by simulating scenarios based on demand signals, customer behavior and historical information”, Lincoln explained.
“Too often, companies transform, fail to achieve their objectives and start another transformation program to adjust. By leveraging the DTO discipline and solutions, they can foresee the effect of their transformational programs and then, execute on them, this largely mitigates project risks,” Robert said.
“If I had to prioritize,’’ he continued,” the use cases that I see as most prominent are digital transformation and customer experience. Companies want to foresee the impact of introducing new digital technological capabilities on processes before they implement them. Also, forward thinking organizations are applying DTO to create bespoke experiences for customers and employees.”
The next frontiers of DTO
Lincoln and Robert agree on the fact that the next phase in the evolution of DTOs will likely involve deeper integration of AI and machine learning. “AI could automate the optimization of processes and make real-time adjustments based on dynamic market conditions and internal performance metrics,” Lincoln commented. “As more companies adopt DTO, clusters will form, and the concept of Digital Twins will evolve into Digital Twins of Ecosystems (DTEs), modeling the interactions between multiple organizations, their stakeholders, and the environment. In addition, DTOs will start to integrate environmental impact assessments and sustainability metrics more deeply into their models.”
“I think an important evolution in DTO disciplines will be the convergence with risk management applications to set the corresponding alleviation strategies. Powered by AI, DTO will help establish continuous feedback and improvement loops from insight to adaptation allowing for more intelligent and “self-adjusting DTOs”. Still and importantly, there is a huge people component. DTO does not replace the human dimension but is an enabler for better decisions.”
1. Gartner Market Guide for Technologies Supporting a Digital Twin of an Organization 4 January 2023, Author: Marc Kerremans, VP Analyst. GARTNER is a registered trademark and service mark of Gartner, Inc. and/or its affiliates in the U.S. and internationally and is used herein with permission. All rights reserved.